SINGAPORE (May 20): How do you install a wind turbine almost the size of the Chrysler building in the open ocean? Just get a boat with deck space larger than a football field and a crane that can lift the weight of 1,100 Chevy Suburban SUVs.
Those specialist ships are scarce, numbering about a dozen in the world. And at a cost of more than US$300 million ($410.8 million), they each need to be capable of hoisting generators the size of shipping containers atop steel towers hundreds of feet tall.
While wind turbine manufacturers led by MHI Vestas Offshore Wind and General Electric Co (GE) are expanding the size of their machines quickly, the small cadre of mainly closely held specialist shipowners that does the installations is hesitant to build more ships before they know how big the vessels need to be. That indicates a looming ship shortage in the next decade, threatening the outlook for a sevenfold jump in offshore wind capacity by 2030.
“The installation companies will have to adapt to meet expected demand,” says Michael Simmelsgaard, head of offshore wind at Vattenfall, a utility with projects from the UK to Scandinavia. “We will see ships entering the market that were not originally used for turbines, but for offshore oil and gas.”
Those ship owners include Deme Group, controlled by Belgian engineering company Compagnie d’Entreprises and Luxembourg-based Jan De Nul Group. Both are building new ships. For now, analysts say the industry has underestimated the challenge faced by ever-larger machines.
That concern does not seem to register with the ambitions of renewable energy developers. Europe’s biggest utilities are investing more than US$10 billion this year alone on getting electricity from sea breezes. BloombergNEF expects offshore wind capacity to jump to 154GW by the end of the next decade from about 22GW now as the thirst for cleaner electricity grows. Most offshore wind farms are in northwest Europe, but China, the US and South Korea will be big markets in the future.
Installation vessels mostly in Europe
Installing turbines is a feat of engineering. First, foundations weighing hundreds of tons are rammed or anchored into the seabed at depths of at least 50m. Then, a massive crane hoists steel towers, each the size of a small skyscraper, onto the footings. Finally, the generator housing, or nacelle, is perched on top and the blades are put in place. Those nacelles are about the size of a truck.
The few ships designed to do this are almost exclusively in Europe, and some are booked up until next year. Owners can charge anything from US$112,000 to US$180,000 a day for their services. That compares with the below US$25,000 rate for one very large crude carrier class supertanker.
To squeeze more energy out of the wind, manufacturers such as MHI Vestas are building bigger machines with longer blades and more powerful nacelles. The next generation of turbines will need even bigger boats.
One of them is Jan De Nul’s Voltaire, named after the French writer, which starts service in 2022. With a length of 169m, it has deck space bigger than the football pitch at London’s Wembley Stadium. Built in China, the ship will be able to carry
3,000 tons of equipment to a height of 165m. That is twice the load of Jan de Nul’s Vole Au Vent ship built six years ago and more than enough to hoist the largest turbines currently available.
“We recognise the global trend towards larger wind turbines for increased green energy demand,” says Philippe Hutse, offshore director at Jan De Nul. “The Voltaire will have all the required specifications to meet the upcoming challenges.”
Deme Group’s new vessel will be ready for installations next year. At more than 215m long, its crane will be able to lift 5,000 tons to a height of more than 170m.
Growing too fast
Nevertheless, a shortage of ships could come as early as 2022, since the European market is expanding at an “unprecedented pace”, according to Clarksons Platou, a broker that has arranged offshore wind charters for a decade. The squeeze will only get tighter as boats leave the region for growing markets in Asia and the US.
“Some of the current vessels can be upgraded to serve the new turbines to a certain extent,” says Jens Egenberg, an analyst at Clarksons Platou in Oslo. “But this is not nearly enough to meet the demand for installing the larger turbines.”
But the wind industry has survived challenges in the past. Decades ago, with turbines still in their infancy, there were not enough specialist cranes to erect them. And about 10 years ago, costs were rising fast and offshore wind farms got delayed because there were not enough installation vessels. Offshore wind was deemed “a niche” by the then head of Vestas Wind Systems, Ditlev Engel.
Generator sizes have multiplied over the decades, from the half-megawatt units used in the first offshore wind farm built in 1991 off the Danish coast to the 12mw giants currently planned by GE. Vestas chairman Bert Nordberg said last month that a single generator could be as big as 20mw in the future.
The first prototype of GE’s biggest model will be installed on land for testing at the Port of Rotterdam in the Netherlands, says John Lavelle, CEO of the company’s offshore wind unit. He has already started offering the turbine in Europe and the US for deliveries from 2021.
Hard to determine size
That gamble on future turbine size is precisely what is occupying the thoughts of shipping executives. Anyone building a new installation vessel will be looking at a lifespan of at least 20 years, says Even Larsen, CEO of Fred Olsen Ocean in Oslo.
His company has three such jack-up ships — so called because of their long support legs that can be lowered to the seafloor — and may invest in more. His dilemma is how big to make the next ships. Build too small and you will not get the job. Build too big and the economics will not stack up. Larsen says vessel owners are waiting to see what the others are doing.
“It has been a challenge to define the required characteristics of a potential newbuild, owing to the rapid development in the turbine size,” Larsen says. “It’s important to hit the target with a new vessel design.”
As many as 18 nations will have offshore turbines by 2027, compared with seven in 2017, according to industry consultant Wood Mackenzie. Wind provided less than 1% of the world’s power in 2006, but BNEF estimates that will rise to 24% by 2040.
And while numbers like those would be great for the environment, as well as turbine makers and utilities, they show the challenges facing the installation market. In a sign of what is to come, ship operator Seajacks International’s Seajacks Zaratan, built specifically for the harsh conditions of the North Sea, is leaving the main European market to install turbines in the Taiwan Strait this year.
About 10 of the current installation vessels were built five to seven years ago and almost all of them have gone through some upgrades, according to Soren Lassen, senior offshore wind analyst at Wood Mackenzie’s power and renewables division. As a result, he expects to see more vessels from the oil and gas industry being adapted for offshore wind, especially to install foundations.
The cost to hire a ship is also as much as 30% lower than it was earlier this decade because of an oversupply. That is putting even more pressure on getting it right and the need for a higher utilisation rate to make a profit.
“The pressure on rates has been quite dramatic,” says Fred Olsen’s Larsen. “At these rates, it’s difficult to secure a good business case for a newbuild.”
While there are enough ships to serve the industry for now, BNEF analyst Tom Harries in London sees a crunch in about four to five years.
“You’ll very quickly run out of boats that will be big enough to lift the next generation of turbines,” he says. “The vessel owners have underestimated the size and now everyone is waiting to see who will move first.”
